What ails auto sales in India

11 Nov,2014

 

By Avik Chattopadhyay

 

The Indian automobile industry, like elsewhere in the world, is an important barometer for the country’s economic health. And within the industry, passenger cars [including SUVs, UVs, MPVs and vans] stand on a pedestal as they are still aspirational [given a still very low penetration per household], most written about and, symbolic of status and success.

 

When sales of passenger cars go up, everybody is happy…the automakers, the dealers, the finance companies, the service providers, the economists, the revenue collectors, the policymakers and…the consumer. Analysts say it is an outcome of “sentiment”…when the prospective new car buyer/ upgrader feels secure and optimistic about the economy therefore justifying the car purchase.

 

So, after some 24 months of stunted car sales, when the overall industry numbers are looking more optimistic in terms of actual growth, everybody seems to be feeling good again. Analysts have predicted a 3-5% growth in numbers over 2013. Just that, on a closer look, the growth is being experienced by only a handful of brands and not the industry across the board. The sentiment of the customer has turned positive towards only those brands that have got their fundamentals in place. Maruti Suzuki, Hyundai and Honda have been the real beneficiaries. Mahindra seems to be getting back into action now. I am keeping the “luxury” brands out of this as that stratospheric segment is on its own roll anyway. But the others…almost 15-odd brands…made up of some truly global juggernauts and a couple local powerbases are still feeling the heat. A few have been at it for close to two decades now. And they have no dearth of “products”, the most popular punching bag cited for non-performance!

 

What really ails these brands? Why do they not sell? Why do they not connect? Why are they not aspirational enough for more customers to embrace them?

 

Five factors, given my experience of being part of the automotive industry.

 

The 10% marketshare malady

This is where the problem starts. Big brands have big egos. They enter the market on a high horse. Hence we hear of the “we will garner 10% of the Indian market by so-and-so year” statements from time to time by these big global brands.Nobody has really said that they aim for the most satisfied customers! Quite simply, putting the cart before the horse. Without creating relevance, articulating the promise and creating mechanisms of actually delivering it, brands think that setting up a plant and opening showrooms will ensure long term sales. After the initial euphoria dies down, the marketshare malady lies exposed.

 

After-sales comes…after sales

The service network should be the first piece in the business puzzle to be put in place, but sadly it is not. A just-released study by American Express reiterates that brand loyalty increases in India by a multiplier through better after-sales service. And this is common sense for a highly-involved product category like automobiles. However, lack of servicing capacity, incapable skills, non-availability of spares and shoddy customer relationship programmes have let down the early brand adopters, leading to negative word-of-mouth and eventual brand disconnect. One cannot give the erring brands any special ‘gyaan’ on the remedy except for requesting them to get the basics right and learn from the ones who are successful.

 

Marketing = advertising + FB page + Twitter handle

This aspect of the business could make a real difference, in terms of sustainable customer engagement in the brand’s nurturing. While the marketing function should be all-encompassing covering right from the right product portfolio to segmented promotional tactics, the reality is that the function is still seen as only an advertising arm churning our TVCs and print ads, having an FB page and running a Twitter handle. Marketing has to be both more strategic as well as on-ground, being the veritable bridge for the brand.

 

Lack of internal engagement

Companies plan and spend a lot of resources on training the salespersons at the dealerships [and rightly so] to ensure they sell better. But what about the employees? How are they inducted? What is the brand immersion programme for them? How are pride and conviction built? Are they seen as employees or stakeholders? Are they treated as headcount or potential brand ambassadors? Internal engagement is a much neglected practice. Organisations somewhere feel that working for them is something of a privilege for the employee…a feeling totally misplaced as quality manpower is precious and loyalty a sustainable asset.

 

A leadership disconnect?

The fifth and last factor may be the touchy for some, but I am of the opinion that there are too many career ‘sales’ people heading organisations. They bring a uni-dimensional approach to the business, of moving from one monthly promotional / discount scheme to another, without much focus on building brand relevance and sustainable customer management. They are not typically innovative or willing to experiment. If one analyses the brands that are successful in this market, one will notice that the leadership is well-rounded and with varying backgrounds like production, procurement, HR or for that matter, even marketing.

 

Avik Chattopadhyay is a leading marketing and brand consultant. He has spent over two decades in the automotive industry and was also CEO of Saffron Brands India. This article first appeared in ‘dna of brands’ dated November 3.

 

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